I L L INO I S E C O NOM IC R E V I EW The Monthly Illinois Economic Review contains information on national, statewide, and local economic performance by measuring job growth, unemployment, and business activity. This information is compiled by IGPA Economist Geoffrey Hewings, director of the Regional Economics Applications Laboratory at the University of Illinois at Urbana-Champaign with assistance from Yizhou Zhang and Kijin Kim. JANUARY 2015 EMPLOYMENT E MP LOY ME N T DA TA S UM M A RY Illinois added 17,100 jobs in December 2014, compared with a 7,100 job gain in November 2014. Compared to December 2014, Illinois has added 51,600 jobs. The three-month moving average, a more stable measure of labor market, showed an increase of 7,300 jobs per month. The Nation added 252,000 jobs at a rate of 0.18%, compared with a 353,000 job gain in November 2014. The three-month moving average was up by 288,700 jobs per month. The RMW added 23,800 jobs in December after a 69,400 job gain in November 2014. The threemonth moving average was up by 41,700 jobs per month. Since the beginning of the recession in December 2007, Illinois has posted negative job changes 38 times and positive job gains 45 times so far. The state of Illinois now has a net loss of 107,600 jobs since the beginning of the recession in December 2007. Since January 2010, when Illinois employment growth resumed after the national recession, Illinois has added 295,400 new jobs. By December 2014 in Illinois, Professional & business services and Leisure & hospitality have both recovered to their previous employment peak levels. The 12-month-ahead job recovery forecasts also show that the future recovery rates will increase for Construction, Manufacturing, Professional & business services, and Leisure & hospitality. The shadow unemployment rates for Illinois, RMW and the Nation were 10.54%, 11.33% and 11.14%, compared to official unemployment rates of 6.2%, 5.4% and 5.6%. Through December 2014, the cumulative job growth for Illinois, RMW and the Nation compared to January 1990 stood at 11.62%, 15.75%, and 28.59%, respectively. DECEMBER 2014 January 2015 Positive Total NonFarm Employment E MP LOY ME N T C HA RT Nov 2014– Dec 2014 Growth Rate % Number of Jobs Last 12 months Growth Rate % Number of Jobs Dec 2014 Shadow U.R. ** Nation 0.18 252,000 2.15 2,952,000 11.14% RMW* 0.12 23,800 1.43 278,700 11.33% Illinois 0.29 17,100 0.89 51,600 10.54% *RMW stands for Rest of the Midwest including six states, Indiana, Iowa, Michigan, Missouri, Ohio and Wisconsin. **REAL has estimated a shadow unemployment rate; this is calculated as the unemployment rate that would be observed if labor force participation rates matched the average for the 15-year period from 1990 to 2004. 2 T OTA L N O N - FA R M E M P L OY M E N T G ROW T H R A T E J A N 1990 –D E C E M B E R 2014 135.00 130.00 125.00 120.00 115.00 110.00 105.00 100.00 IL RMW National 95.00 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 L A S T 1 2 M O N T HS TOTA L NO N - FA R M E M P L OY M E NT GROW T H R AT E JA N 2 0 1 4 – D E C 2 0 1 4 Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 Nov/14 0.40% Nation RMW IL 0.30% 0.20% 0.10% 0.00% -0.10% -0.20% -0.30% -0.40% 3 Dec/14 Total Non-farm Employment growth rate by Sector Nov 2014 –Dec 2014 20 Construction 30 Manufacturing 40 Trade, transportation & utilities 50 Information 55 Financial activities 60 Professional & business services 65 Education & health 70 Leisure & hospitality 80 Other Services 90 Government -1.00% -0.50% 0.00% 0.50% 1.00% 1.50% Nation S HA D OW 2.00% 2.50% RMW 3.00% 3.50% IL UN E MP LOY ME N T Unemployment Rate: Official and Shadow The unemployment rate estimates the percentage of workers in the labor force who are currently unemployed but who are seeking work. The labor force participation rate is the percentage of the population 16 and older who are either working or actively seeking work. The participation rate has declined since the 1990s and thus a number of analysts feel that the official unemployment rate does not account for a larger number of people who have dropped out of the labor force. REAL has estimated a shadow unemployment rate; this is calculated as the unemployment rate that would be observed if labor force participation rates matched the average for the 15-year period from 1990 to 2004. In the 1990s, the average participation rate was 68.2% in Illinois whereas in 2010, it has been only 66.6%. For the 15 years from 1990 to 2004, the average participation rate was 68.1% in Illinois. In the 1990s in the US, the average participation rate was 65.5% whereas in 2010, it has been 66.0%; for the 15 years from 1990 to 2004, the average participation rate was 66.6%. The figures on the next page show the difference between the official and shadow unemployment rate for Illinois (top figure) and the US as a whole (bottom figure). After 2000, the gap between Illinois’s official and shadow unemployment rates increased until 2006 when it began to shrink. However, the gap went increasing again since 2010. To bring the two together a further 98,400 jobs would need to be created in Illinois. 4 Illinois 14% Unemployment Rate 12% Shadow Unemployment Rate 10% 8% 6% 4% 2% 0% US 14% Unemployment Rate Shadow Unemployment Rate 12% 10% 8% 6% 4% 2% 0% 5 E MPLOYMENT F ORECAST Illinois Total non-farm Construction Manufacturing Trade, transportation & utilities Information Financial Activities Professional & business services Education & health Leisure & hospitality Other services Government Number of Jobs (in thousands) 6200 December 2014 5,880,300 211,300 579,600 1,166,000 December 2015 (p) 5,940,800 222,100 612,900 1,165,600 60,500~ 62,200 10,800 33,300 -400 Growth Rate % 1.03%~ 1.06% 5.11% 5.75% -0.03% 96,600 94,400 -2,200 -2.28% 368,200 915,500 894,200 554,400 253,900 830,700 367,300 927,500 908,100 558,700 253,700 830,300 -900 12,000 13,900 4,300 -200 -400 -0.24% 1.31% 1.55% 0.78% -0.08% -0.05% Number of Jobs Total Non-farm Employment Forecast 6000 5800 5600 5400 5200 5000 4800 4600 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year * The values by sector for the number of jobs added are the lower bound of the forecast. 6 Employment Forecast for MSAs Sector with Highest Growth Rate (p) Sector with Lowest Growth Rate (p) - LEI (0.94%) INF (-10.61%) 0.32%~ 0.38% + INF (1.51%) MAN (-4.17%) -15,200~8,100 -0.36%~0.19% - CON (2.72%) MAN (-1.30%) 180,900 -1,000~ -800 -0.53%~ -0.44% - PRO (1.39%) INF (-4.51%) 51,200 50,500 -700~-500 -1.40%~-1.02% - PRO (1.10%) INF (-6.66%) Kankakee 43,900 44,300 300~600 0.75%~ 1.26% + PRO (2.36%) MAN (-1.08%) Peoria 177,100 179,900 2,800~3,100 1.59 %~ 1.76% + TTU (3.89%) INF (-2.61%) Rockford 148,400 149,900 1,520~2,200 1.02%~1.51% + LEI (2.78%) INF (-5.13%) Springfield 111,000 110,800 -200~100 -0.15%~ 0.10% - EDU (0.98%) CON (-2.96%) Nov 2014* Nov 2015 (p)* Number of Jobs * Growth Rate % Growth Bloomington-Normal 88,000 87,300 -600 ~ -570 -0.70%~ -0.65% Champaign-UrbanaRantoul 107,600 108,000 300~400 Chicago 4,219,000 4,203,800 181,900 MSAs Davenport-Rock Island-Moline Decatur *Total Non-Farm Jobs Number of Jobs (in thousands) 95000 Total Non-farm Employment Forecast Bloomington (BN) Number of Jobs (in thousands) 90000 115000 85000 110000 80000 105000 75000 100000 70000 95000 65000 90000 60000 1990 Total Non-farm Employment Forecast Champaign-Urbana-Rantoul (CU) 120000 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 85000 2014 1990 Year Number of Jobs (in thousands) 4400000 1992 1994 1996 Number of Jobs (in thousands) 195000 Total Non-farm Employment Forecast Chicago (CHI) 1998 2000 2002 2004 2006 2008 2010 2012 2014 2010 2012 2014 Year Total Non-farm Employment Forecast Davenport-Rock-Island-Moline (DRM) 190000 4200000 185000 180000 4000000 175000 3800000 170000 165000 3600000 160000 3400000 155000 150000 3200000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 1990 2014 1992 1994 1996 1998 2000 2002 2004 2006 2008 Year Year 7 Number of Jobs (in thousands) 62000 Number of Jobs (in thousands) 50000 Total Non-farm Employment Forecast Decatur (DE) 60000 48000 58000 46000 Total Non-farm Employment Forecast Kankakee (KA) 44000 56000 42000 54000 40000 52000 38000 50000 36000 48000 34000 46000 32000 44000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 30000 2014 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year Number of Jobs (in thousands) 200000 Year Number of Jobs (in thousands) 170000 Total Non-farm Employment Forecast Peoria (PE) Total Non-farm Employment Forecast Rockford (RO) 165000 190000 160000 180000 155000 170000 150000 160000 145000 140000 150000 135000 140000 130000 130000 125000 120000 120000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year Number of Jobs (in thousands) 120000 Year Total Non-farm Employment Forecast Springfield (SP) 118000 116000 114000 112000 110000 108000 106000 104000 102000 100000 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Year 8 Barometer of Job Recovery Illinois Recovery Scenarios Growth Rate To Recover At the point of 2014- December At the point of 2010-June In 5 years 53,800 jobs/year 106,800 jobs/year In 8 years 33,600 jobs/year 66,800 jobs/year In 10 years 26,900 jobs/year 53,400 jobs/year In 15 years 17,900 jobs/year 35,600 jobs/year * The figure 564,500 is the number of jobs needed for the Illinois economy to recover to the previous employment peak, Nov-2000. The gap between the previous peak, Nov-2000 and the previous lowest point, Dec-2009 is 466,100. Adding 98,400, the number of jobs that needed to bring the shadow and official unemployment rates together, the total number of jobs that Illinois needs to create is 564,500. ** The figure 30,400 represents the jobs recovered from December 2009 (previous lowest level) through June 2010. *** The figure 295,400 represents the jobs recovered from December 2009 through December 2014. 9 I LLINOIS J OB R ECOVERY BY S ECTOR Illinois job recovery by sector from Dec 2007 –December 2014 Job Changes in Recession Period* Job Changes in Jan 2010-Dec 2014 Recovery Rate Forecasted Job Changes Jan 2010-Dec 2015 Forecasted Recovery Rate Construction -63,800 7,400 11.60% 18,200 28.53% Manufacturing -114,500 24,700 21.57% 58,000 50.66% Trade, transportation & utilities (TTU) -97,100 45,100 46.45% 44,700 46.04% Information -11,300 -7,800 -69.03% -10,000 -88.50% Financial activities -32,700 3,200 9.79% 2,300 7.03% Professional & business services -92,700 134,600 145.20% 146,600 158.14% Education & health 32,200 72,700 - 86,600 - Leisure & hospitality -22,300 42,500 190.58% 46,800 209.87% Other Services -6,300 -2,100 -35.59% -2,300 -38.98% Government *Recession period: Dec 2007- Dec 2009 5,600 -25,600 - -26,000 - Recovery by Sector During the recession period of December 2007-December 2009, 8 out of 10 Illinois sectors experienced negative job growth. Education & health and Government are the only 2 sectors that had positive job growth during the recession. Since January 2010, Illinois employment growth resumed. Construction, Manufacturing, Trade, transportation & utilities, Financial activities, Professional & business services and Leisure & hospitality have recovered 11.60%, 21.57%, 46.45%, 9.79%, 145.20% and 190.58% respectively, from the jobs lost during the recession. By December 2014, Professional & business services and Leisure & hospitality had both recovered to their previous employment peak levels. However, recovery rates for sectors such as Information and Other Services are still negative, namely -69.03% and -35.59% respectively. The 12-month-ahead job recovery forecasts show that the future recovery rates will increase for Construction, Manufacturing, Professional & business services, and Leisure & hospitality. Trade, transportation & utilities (TTU), Information, Financial Activities and Other Services are predicted to lose jobs. 10 C ATCH UP S CENARIO Catch-up Scenario* of Previous Peak Job Index in Illinois Nation RMW IL Previous Peak Current Catch-up 126.49 (Dec-2007) 119.39 (Jun-2000) 115.00 (Nov-2000) 128.59 (Dec2014) 115.75 (Dec2014) 111.62 (Dec2014) Positive growth Positive growth Positive growth Recovery rates at December 2014** 123.05% 94.07% 73.30% Metro Areas***: Bloomington Normal ChampaignUrbana Chicago Davenport- Rock Island-Moline Decatur Kankakee Peoria Rockford Springfield Metro-East 142.06 (Feb 2002) 116.26 (Jan 2009) 114.82 (Nov 2000) 115.06 (Mar 2008) 112.38 (Jan 2000) 125.66 (Nov 2011) 122.09 (Aug 2008) 122.81 (Nov 2000) 110.94 (Aug 2000) 114.97 (Jun 2001) 134.69 (Nov 2014) 109.11 (Nov 2014) 112.28 (Nov 2014) 109.87 (Nov2014) 94.85 (Nov 2014) 122.61 (Nov 2014) 113.58 (Nov 2014) 110.08 (Nov 2014) 104.38 (Nov 2014) 105.52 (Nov 2014) Negative growth Negative growth Positive growth Positive growth Negative growth Positive Growth Positive growth Positive growth Positive growth Negative growth NA NA 79.93% 37.33% NA 60.08% 22.41% 29.67% 32.53% NA * Catch-up scenarios are based on average monthly growth rate over the previous 12 months. Nation already passed its previous peak at February 2005. **Recovery rates are percentage of jobs added since the last official end of the recession. *** Due to lag of data release schedule there is one month of time lag in the catch-up scenario for metro areas. NOTE: The US Bureau of Labor Statistics and the Illinois Department of Employment Security changed the way national and state employment data are coordinated to be more consistent. As a result, there have been some significant changes in estimates for Illinois over the past year. 11 CBAI DECREASED IN NOVEMBER This index is based on national indices of leading indicators and is a barometer for the economy, tracing the path of growth or contraction through to the current period and then forecasts up to 24 months into the future. The Chicago Business Activity Index (CBAI) decreased to 93.5 in November from 103.1 in October. The fall is attributed to negative job growth in the non-manufacturing sector and to the decline in retail activities in the Chicago area. In November, the national and regional economies shared mixed features. The Federal Reserve Board announced that the industrial production index increased 1.3 percent in November after having unchanged in October. Capacity utilization for the industrial sector rose 0.8 percentage point to 80.0 in November. The Chicago Fed reported that the Chicago Fed National Activity Index (CFNAI) rose to +0.73 in November from +0.31 in October, led by a rise in production- and employed-related indicators. In the Chicago region, the employment in manufacturing and construction rose 0.29 percent and 0.64 percent, respectively, in November. The employment in nonmanufacturing decreased 0.04 percent. Retail sales are estimated to have declined 0.1 percent. In the coming months, the national economy is likely to stay on the path to recovery. The economic growth reflected in the CFNAI-MA3 suggests that national economic activity was above its historical trend. The Bureau of Labor Statistics reported that total nonfarm payroll employment rose by 252,000 and the unemployment rate declined to 5.6 percent in December. Considering recent national economic conditions and movements of projected CBAI, the Chicago economy is expected to continue its recovery trend over the next several months. Chicago Business Activity Index 140 CBAI (Current: 93.5) 4 month forecast above trend 120 1 month 3 month 1 year Historical (ago) 103.1 97.7 100.4 trend 100 93.5 Forecast (ahead) 91.1 111.0 80 below trend 60 40 20 01/07 01/08 01/09 01/10 01/11 01/12 01/13 01/14 01/15 12 METROPOLITAN STATISTICAL AREA LEAGUE TABLES MSA LEAGUE TABLES SUMMARY* Peoria (2nd to 9th) experienced the deepest fall in November 2014. Champaign-Urbana-Rantoul (3rd to 8th), Bloomington-Normal (8th to 10th) and Kankakee (4th to 7th) also dropped in terms of rank from last month. In the 12 months growth league table, upward moves were recorded for Rockford (4th to 2nd), Decatur (8th to 7th) and Davenport-Rock Island-Moline (10th to 8th). Downward moves were recorded for Chicago (2nd to 3rd), Kankakee (3rd to 4th), Peoria (7th to 9th) and Bloomington-Normal (9th to 10th). In the 12 months growth league table, Bloomington-Normal dropped to the last place and Champaign-Urbana-Rantoul remained in the first place. *NOTE: The US Bureau of Labor Statistics and the Illinois Department of Employment Security changed the way national and state employment data are coordinated to be more consistent. As a result, there have been some significant changes in estimates for Illinois over the past year. 13 MSA League Tables*: Non-farm Employment Growth Rate Monthly growth: Rank October 2014 November 2014 Rank Change** 1 Rockford (0.56%) Rockford (0.25%) 1 (+0) 2 Peoria (0.46%) Decatur(0.21%) 2 (+5) 3 Champaign-Urbana-Rantoul (0.37%) Davenport-Rock Island-Moline(0.16%) 3 (+6) 4 Kankakee (0.23%) Springfield (-0.03%) 4 (+2) 5 Chicago (0.12%) Chicago(-0.03%) 5 (+0) 6 Springfield (0.12%) Metro-East(-0.05%) 6 (+4) 7 Decatur (0.03%) Kankakee(-0.26%) 7 (-3) 8 Bloomington-Normal (-0.02%) Champaign-Urbana-Rantoul(-0.31%) 8 (-5) 9 Davenport-Rock Island-Moline (-0.08%) Peoria(-0.34%) 9 (-7) 10 Metro-East (-0.16%) Bloomington-Normal(-0.57%) 10 (-2) Growth over last 12-months: Rank October 2014 November 2014 Rank Change** 1 Champaign-Urbana-Rantoul (1.8%) Champaign-Urbana-Rantoul (0.89%) 1 (+0) 2 Chicago (0.83%) Rockford (0.77%) 2 (+2) 3 Kankakee (0.68%) Chicago (0.76%) 3 (-1) 4 Rockford (0.55%) Kankakee (0.21%) 4 (-1) 5 Springfield (0.08%) Springfield (-0.2%) 5 (+0) 6 Metro-East (-0.2%) Metro-East (-0.24%) 6 (+0) 7 Peoria (-0.32%) Decatur (-0.38%) 7 (+1) 8 Decatur (-0.38%) Davenport-Rock Island-Moline (-0.48%) 8 (+2) 9 Bloomington-Normal (-0.52%) Peoria (-0.64%) 9 (-2) 10 Davenport-Rock Island-Moline (-0.99%) Bloomington-Normal (-1.11%) 10 (-1) MSA League Tables are based on revised employment data. For instances of equal growth rate for multiple MSAs ranks are decided based on change of growth rate from previous month. * 14 Unemployment Claims (Initial) Unemployment Claims (Initial, IL) Unemployment Claims (Initial, US) 40,000 1,200,000 Initial Claims (IL) Initial Claims (US) 35,000 1,000,000 30,000 800,000 25,000 ` 600,000 20,000 400,000 15,000 200,000 Jan/14 Jan/13 Jan/12 Jan/11 Jan/10 Jan/09 Jan/08 Jan/07 Jan/06 Jan/05 Jan/04 Jan/03 Jan/02 Jan/01 5,000 Jan/00 10,000 0 15